Overview
CASE STUDY PART 1
Analyse the causes of the global economic slowdown specifically focused on the impact to Singapore through its trade with other nations.
Identify and discuss events that have played a role in the recent economic slowdown. In your response outline why and how these events have resulted in global economic slowdown.
Evaluate how the global economic slowdown has impacted Singapore's international trade and the effect from this on the Singaporean economy. For this use the AD-AS model and also the exchange rate model. (remember to clearly identify and explain all shifts and movements and explain the transition to the new equilibrium). Remember to explain the reasoning and assumptions underlying what your 2 diagrams show. Also include a comment at the end to link any implications you find from your diagrams that are reinforced (or offset) from your analysis.
Note: The AD-AS model and exchange rate model diagrams you present must be your own and not a copy from another source. You can draw the diagram on paper, take a photo and insert the image; alternately, you can use software to 'draw' your diagram.
CASE STUDY PART 2
Analyse how global economic slowdown is impacting the entire economy of Singapore including reference to the key macroeconomic indicators covered as part of the course.
In discussing how the economic slowdown has impacted Singapore you will need to take a broader approach than in part 1 which asked you to concentrate your analysis on trade. Here in part 2 you must focus on the whole economy, not just importing/exporting sectors of the economy.
- Evaluate the impact of global economic slowdown on Singapore using the short-run Phillips Curve (remember to clearly identify and explain all shifts and movements and explain the transition to the new equilibrium). Remember to explain your reasoning and assumptions underlying what your diagram shows. In your response identify how global economic slowdown has impacted economic output, employment and inflation in Singapore. To support your analysis conduct some desktop research to compare pre-pandemic ouput, employment and inflation relative to recent slowdown levels. Based on your desktop research comment on whether you believe the models and theory covered in the course holds up.
Note: The Phillips curve you present must be your own and not a copy from another source. You can draw the diagram on paper, take a photo and insert the image; alternately, you can use software to 'draw' your diagram.
- CASE STUDY PART 3
Provide an overview of any actions undertaken by the Monetary Authority of Singapore (MAS) and government in response to the issue of global economic slowdown AND provide an evaluation of whether you believe fiscal or monetary policy would be more effective in dealing with the problems (or if you believe they are the same in terms of their effectiveness).
Apply the IS-LM model to demonstrate how policy makers in Singapore have responded to the global economic slowdown (remember to clearly identify and explain all shifts and movements and explain the transition to the new equilibrium). Remember to explain your reasoning and assumptions underlying what your diagram shows.
Linkings to the previous parts of the case study, discuss how the causes of the global economic slowdown may complicate optimal policy response to correct the slowdown.
Debate whether fiscal or monetary policy would be most appropriate to address the problem of the global economic slowdown. Use the IS-LM model to support your arguments. (Hint: think about the slopes of the curves).